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Moscow denies surrender "ultimatum"

Biggest test of diplomacy since Cold War

European Council President Herman Van Rompuy scheduled a summit of the EU's 28 leaders for Thursday as EU foreign ministers met Monday to assess Russian reaction to Ukraine's new pro-EU leadership in Kyiv.

Rompuy said the summit would "discuss the latest developments in Ukraine and how to facilitate the necessary de-escalation of the situation."

"In the absence of de-escalating steps by Russia the EU shall decide about consequences for bilateral relations of EU and Russia," said the EU ministers in their statement.

German Foreign Minister Frank-Walter Steinmeier stressed the need for mediation, saying talks were needed between Ukraine's new leadership in Kyiv and Russia.

He also called for an observer mission of the Organization for Security and Cooperation in Europe (OSCE) to establish a clear picture of the situation in Crimea and eastern Ukraine.

Visiting Geneva late Monday, Steinmeier had talks with Russian Foreign Minister Sergei Lavrov who criticized threats of "sanctions and boycotts."

Russia's central bank spent $10 billion (7.2 billion euros) of its reserves to prop up the ruble as investors took fright. The east-west tension also rattled European stock markets, with the DAX closing 3.4 percent in the red in Frankfurt on Monday.

A team from the International Monetary Fund (IMF) arrived in Kyiv late Monday, saying it would conduct a 10-day fact-finding mission to consider the new government's request for urgent financial assistance.

In other retaliatory measures, the US and Britain said they were withdrawing official delegations from the Winter Paralympics that are due to open on Friday in the Black Sea resort of Sochi, where Russia staged the Winter Olympics.

Crimea has 2 million mostly Russian-speaking people and hosts Russia's Black Sea Fleet at Sevastopol.